The Third Session of the Sub-Committee

THE THIRD SESSION OF THE SUB-COMMITTEE

ON CUSTOMS PROCEDURES

3 - 5 SEPTEMBER 1998

REPORT TOTHE COMMITTEE ON TRADE AND INVESTMENT

LANGKAWI, KEDAH, MALAYSIA

1.The APEC Sub-Committee on Customs Procedures (SCCP) held its third session for 1998 on 3 – 5 September at the Sheraton Perdana Resort in Langkawi, Kedah, Malaysia. Delegates from Australia; Brunei Darussalam; Canada; Chile; the People’s Republic of China; Hong Kong, China; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; the Republic of the Philippines; Singapore; Chinese Taipei; Thailand and the United States participated in the meeting. The APEC Secretariat and representatives from the members-designate, namely Peru, Russia and Vietnam also attended the meeting. A representative from the PECC was present as an Observer. The list of participants appears as doc. no. 98/SOM3/CTI/SCCP3/004. The Honourable Dato' Wong See Wah, Deputy Minister, Ministry of Finance, Malaysia, welcomed all the delegates and observers. Mr. Madehi Hj. Kolek, Deputy Director General of Customs (Implementation), Malaysia chaired the meeting.

AGENDA ITEM 1: OPENING REMARKS

2.Following his opening remarks, the Chair called upon the Head of Logistics to brief members on the administrative details of the meeting (doc. no. 98/SOM3/CTI/SCCP3/003).

AGENDA ITEM 2: ADOPTION OF THE AGENDA

3.A draft agenda (doc no. 98/SOM3/CTI/SCCP3/001) and an annotated agenda (doc no. 98/SOM3/CTI/SCCP3/002) were provided to members. The agenda was accepted with an inclusion of a video presentation by New Zealand during closing remarks.

AGENDA ITEM 3: REPORT AND DISCUSSION OF MEETINGS

3.1Report on SOM II / CTI II

4.The Secretariat briefed the meeting on the outcome of the CTI, SOM and APEC Trade Ministers meetings held in June 1998 in Kuching. The Secretariat’s reports of these meetings appears as doc. no. 98/SOM3/CTI/SCCP3/021.

5.The SCCP noted that the meetings had discussed a broad spectrum of issues and was updated on the following matters, including:

• CTI’s discussion on issues such as its 1998 work programs, progress reports on CAPs, forecast of TILF deliverables, project proposals for submission to July 1998 BAC and specifically its endorsement of SCCP’s proposal on the funding mechanism;

• SOM’s decision to issue guidance to APEC fora on strengthening the management of APEC Ecotech activities and on enhancing the business/private sector participation as recommended by ESC;

• Ministers reviewed the progress on the implementation of instructions given by Leaders in Vancouver on ongoing APEC work program on trade and investment liberalization and facilitation. In advancing work on E-Commerce, Ministers requested the Task Force to take into account the

views of private sector, differing levels of development in member economies and the need to avoid duplication of work in both APEC and international fora.

3.2Report on the July Meeting of BAC

6.The SCCP meeting took note of the Secretariat’s report on the outcomes of the BAC meeting held in July 1998 which appears as doc. no. 98/SOM3/CTI/SCCP3/006.The Secretariat highlighted several BAC’s decisions which are of relevance to the SCCP, including:

• BAC’s approval of SCCPs’ projects under both Operational and TILF Special Account;

• BAC decisions on requests for waivers relating to funding request of government officials and simultaneous translation;

• BAC’s approval of SCCP’s paper on proposal on managing business sector funding;

• BAC’s endorsement on Secretariat’s paper on Guidelines on Evaluation and Reporting system for APEC project;

7.The Meeting requested the SCCP Chair to impress the BAC, through the CTI, regarding the circumstances which require customs officials to travel and conduct technical assistance programs for APEC members. The meeting agreed with the reason being that most of the expertise required for delivering the various technical assistance programs to implement the SCCP CAPs resides in the Customs Administrations of some APEC member economies. While consultants could be engaged to conduct such training programs, the cost of engaging consultants would be more expensive since economies donate the time of their customs officials.

3.3Report on the other Meetings related to APEC-SCCP

3.3.1.WTO/WCO Rules of Origin Technical Committee

8.Australia reported that the July 1998 deadline for the work program was not achieved. The work program has now been extended to May 1999 for the WCO and November 1999 for the WTO. The deadline had not been achieved due to the complexity of the issues and successful completion of the work still requires significant work. The report appears as doc. no. 98/SOM3/CTI/SCCP3/025.

3.3.2Report on the APEC Heads of Customs Administrations (AHOC) Informal Gathering

9.Japan reported that an AHOC informal gathering was held at Marrakesh, Morocco on 25 June 1998. The informal gathering was attended by 35 participants from 19 APEC member economies and members-designate. The informal gathering:

a)Reaffirmed the necessity in holding informal periodic meetings at the DG-Commissioner level in the APEC region to discuss strategic issues related to trade facilitation and enforcement and to further support SCCP activities;

b)Suggested AHOC meetings to address issues such as review of SCCP’s CAP items including its target dates for implementation, integration of the members-designate into the CAP, integrity, partnership with the private sector; customs-related Electronic-Commerce; and the right balance between trade facilitation and enforcement;

c)Discussed that the hosting of the next meeting be considered by interested member economies.

The report appears as doc. no. 98/SOM3/CTI/SCCP3/009.

3.4Comments by Official Observers

10.PECC with its tripartite constituents of business, academia and government reported that it will continue to contribute on the discussions on various customs matters between SCCP and the private sector. PECC believes SCCP members should maintain their efforts in the trade liberalisation and facilitation which would help to overcome the current financial crisis. While applauding the progress made thus far in various customs areas, PECC urged that additional efforts be made in three areas namely the APEC Tariff Database, the APEC-SCCP Website and CAP especially on streamlining procedures. These comments appear as doc. no. 98/SOM3/CTI/SCCP3/031.

AGENDA ITEM 4:REPORT ON INTEGRITY INITIATIVES

4.1Report on Integrity Measures in APEC-SCCP

11.Australia reported on a series of recent developments in the area of integrity. In particular, it reported on several WCO and WCO Regional initiatives.

12.It also circulated a Draft Integrity Self Assessment Guide which has been prepared by a WCO regional working party consisting of Malaysia, Australia, New Zealand, Hong Kong China and India. In additional Australia tabled a paper titled “ Elements of A Code of Ethics and Conduct” which was designed to provide a reference point for those economies who do not yet have a Code of Ethics and Conduct. Australia encouraged delegates to examine the document and provide any comments they have to the Chair of the WCO working party, Malaysia.

13.Delegates agreed that integrity remains an important issue and asked Australia to provide a status report on developments at the next SCCP meeting. The report appears as doc. no. 98/SOM3/CTI/SCCP3/033.

4.2Inter-Relationship Between Compensation and Integrity

14.Philippines informed that the purpose of any Compensation System of Customs Administration is to reward employees equitably and to provide the means to attract the best and brightest employee. The two major components of a total compensation system is the direct and indirect compensation. For many administrations money is the paramount consideration and is frequently used as an incentive. It was noted that a realistic salary scale is the main factor contributing to the efficiency and effectiveness of customs administration in APEC. The salary survey had revealed the competitive salary offered by the leading customs administrations in APEC. The compensation of salary rates within non APEC economies also validates the strong inter-relationship of integrity with income levels. The report appears as doc. no. 98/SOM3/CTI/SCCP3/032.

AGENDA ITEM 5: STATUS UPDATE ON TECHNICAL ASSISTANCE RELATED TO THE COLLECTIVE ACTION PLANS

5.1Adoption of the Principles of the WTO Valuation Agreement

15.Canada reported that work on this CAP item has been progressing well. It was highlighted that in future receiving economies may have to bear simultaneous interpretation and travel costs as BAC has not approved them. The new members-designate have been requested to submit their assistance requirements which needs careful planning and coordination as additional resources need to be put in place. The report appears as doc. no. 98/SOM3/CTI/SCCP3/010.

5.2Adoption of UN/EDIFACT

16. Australia reported that BAC had approved continuing funding for the project for 1999. Importantly BAC also agreed to waiver re-tendering requirements for the project and Novacomm Inc. will continue as the consultant for the project. Next steps in the project will be a further group training session in 1998 followed by ‘expert missions’ during 1999. Participating economies will be asked to identify possible ‘pilot’ projects for incorporation into training. The project team is also examining linkages with the regional EDIFACT industry and other customs work on UN/EDIFACT. The report appears as doc. no. 98/SOM3/CTI/SCCP3/029.

5.3Adoption of TRIPs

17.US reported that the three APEC members-designate have requested to participate in the next training activities. The assessment of Russia’s IPR program took place in July 1998 while Vietnam’s is tentatively scheduled on September 7 – 11 1998. Peru’s IPR program would be evaluated incident to the training trip to Chile. Between October 1998 and September 1999, 6 economies are scheduled to receive their training missions. As for the training materials the trainers would be using WCO MODEL FOR NATIONAL LEGISLATION TO GIVE THE CUSTOMS POWERS TO IMPLEMENT THE AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS and trainers will discuss customs legal authority, administrative framework and operational procedures. The possibilities of private sector participation is also being explored. The report appears as doc. no. 98/SOM3/CTI/SCCP3/020.

5.4Adoption of the Principles Of Harmonized System of Classification

18.An APEC workshop on the 1996 version of the Harmonised System (HS) was held in Manila from 18 – 20 August 1998. The workshop was jointly organised by the Philippines Tariff Commission and the Bureau of Customs and the Japanese Customs as coordinator of the project. The HS Training Modules were provided by the WCO secretariat. The primary objective of the workshop was to provide an opportunity for those officials who are directly responsible for tariff nomenclature to increase the capabilities in determining correct positions in the Harmonised System whereby contributing to facilitation of customs procedures and of trade. Evaluation by participants revealed that participating economies benefitted from acquiring all about HS through lecturers’ handouts and exchange of views; new skills and knowledge; accession to the HS Convention was encouraged; and participating economies would like to know the actual problems encountered in implementing the HS in other economies. The next phase of the project is to undertake economy-wise advisory missions. The report appears as doc. no. 98/SOM3/CTI/SCCP3/028.

5.5Public Availability of Information on Customs Laws, Regulations, Administrative Guidelines and Rulings

19.Singapore reported that the compilation and production of the best practices handbook and video were completed and distributed at the Banff meeting while a soft copy of it has been uploaded on to the SCCP website. Singapore and Hong Kong, China had developed a set of guidelines to determine members’ implementation status. The meeting endorsed the proposal that member economies using any three of the five categories of dissemination instruments, would be considered as having implemented the CAP. In this regard, the meeting agreed that this CAP has been delivered since all economies have met the criterion and be reported as a deliverable to the CTI. The meeting further agreed to insert a footnote against the objective of the CAP and implementation schedule that improving the business sector’s access to information is an on-going process. The report appears as doc. No. 98/SOM3/CTI/SCCP3/027.

5.6Implementation of Clear Appeal Provisions

20.Canada reported that questionnaires were sent out to various economies to assess the overall infrastructure and general details of each administration and to establish the '‘best practices’ being used with respect to appeal procedures. To further identify the nature of individual assistance required, a discussion paper was distributed. As the results indicated divergent needs, the shepherds conducted individual meetings in each economy tailored to each participants needs in June 1998. Individual follow-up requested by the participants are being considered and developed. They also requested the members-designate to provide information on the technical assistance required. Based on feedback received it was felt that training packages are not the only need but economies need assistance in drafting of legislation and procedures. As such the technical assistance program need to incorporate the type of legal assistance required. The report appears as doc. no. 98/SOM3/CTI/SCCP3/013.

5.7Provision of Facilities for Temporary Importations

21.Chinese Taipei reported that the Overview Seminar on Temporary Importations due on September 22 – 24 1998 was rescheduled to a later date (possibly early 1999) to incorporate private sector participation and to convert it to a regional advisory mission. US reported it has hosted a workshop in August 1998 to prepare a package of materials on carnets and was joined by two technical experts from Canada. US Council for International Business is exploring private sector funding to support temporary importation activities. Members facing funding problems have been asked to communicate with the co-shepherds for support from the private sector. The report appears as doc. no. 98/SOM3/CTI/SCCP3/034.

5.8Implementation of an Advance Classification Ruling System

22.New Zealand reported that under the CAP Technical Assistance Project, The Advance Tariff Rulings is the baby of SCCP’s CAP activities. Although this project is ranked number 10 on the priority list, BAC has approved the funding request for this program. As such assistance will be given to Chinese Taipei in March 1999. Korea will provide assistance to Papua New Guinea at the end of 1999.This report appears as doc. no. 98/SOM3/CTI/SCCP3/008.

5.9Adoption of Kyoto Convention

23.New Zealand reported that BAC has approved the funding for this action plan and proposed that the 1999 assistance program commences in the second half of the year following the WCO Council’s approval of the revised Convention. Experts drawn from economies will work with those economies requiring assistance to compile their legislative requirements to ensure procedures and legislation are in accordance with the new Convention. Members-designate have been requested to provide their assistance requirements. The report appears as doc. no. 98/SOM3/CTI/SCCP3/007.

5.10Risk Management

24.Australia reported that the importance placed on this CAP item by the SCCP had helped in securing TILF funding for 1999. This funding coupled with funding already secured through AusAID has ensured the immediate future of its program. The next step, funded by AusAID, are expert studies mission to China, Philippines and Indonesia in October and November this year. In 1999 there will be further study missions to other requesting economies to assist with implementation strategies and project planning. Another Risk Management Workshop would be held in the first half of 1999 for those economies that were unable to attend the first one in Sydney. It was also reported that the Sydney Workshop had resulted in encouraging reports on activities of economies, namely the Indonesian Customs is establishing a Risk Management Coordination Unit and the Papua New Guinea Customs has developed a Risk Management Policy. As part of the evaluation strategy for the workshop in Sydney there will be a comprehensive follow-up with participants and the results will be reported at the next SCCP meeting (doc. no. 98/SOM3/CTI/SCCP3/024).

5.11Common Data Elements

25.Canada reported that both Canada and Australia have finalised the details of the work plans and have contacted all economies asking that contact person be designated and information updated with respect to current import procedures. A funding proposal for 1999 activities has been approved by BAC. The coordinators hoped to build on work of a similar nature done by the G7 and will share information with all economies. In this connection, Japan outlined the work being addressed by the G7 Customs Experts Group and its achievements by quoting the G7 Finance Ministers conclusion. The group would also assemble information for the project team and assist it where possible. Offer of assistance from the private sector group i.e. International Federation of Customs Brokers has been accepted. The report appears as doc. no. 98/SOM3/CTI/SCCP3/011.

5.12Express Consignment Clearance

26.US reported that the fourth assessment mission is in the planning stage for Thailand. Input for the ‘Best Practices Handbook’ has been gathered from the express industry and the customs administrations that have provided experts / assistance. A seminar on an overview of the WCO Guidelines and three missions have been planned for 1999. Activities will be implemented as planned as funding has been approved by BAC. The report appears as doc. no. 98/SOM3/CTI/SCCP3/019.

5.13Technical Assistance Overview

27.Canada reported that together with Japan they are responsible for the overall coordination of technical assistance. In the last SCCP meeting the need for charting progress against plan was noted. For the purpose of reaching out to external audiences, Canada has coordinated the preparation of status reports on all twelve CAP items and has uploaded them to the SCCP website. It was informed that Japan would report on the results of a questionnaire sent to Russia, Peru and Vietnam to identify their technical assistance requirements and the status of plans for integrating the members-designate into the SCCP CAP. The SCCP budget proposals for 1999 makes provisions for resources to provide technical assistance to the members-designate. Canada stressed that it was important to develop linkage of the efforts of the SCCP and other activities in APEC with those of other fora such as ASEAN, WCO, NAFTA,ASEM and the G7. Canada also noted that at the first SCCP meeting each year CAP coordinators were to report on the progress of each CAP item against the implementation plans/technical assistance program for that CAP item. Coordinators were free to report in any manner but Canada has developed an example methodology which CAP coordinators may want to use. The simple methodology is recommended for each CAP item for periodically preparing a technical assistance status report which shows completed activities, the remaining steps in carrying out the plan and target dates. At critical stages of program delivery feedback could be obtained from training participants and stakeholders such as senior customs administration officials and business representatives. Finally a formal program evaluation conducted after implementation would be assisted by a pre-implementation review at an early stage to ensure appropriate data is collected during implementation. The APEC Secretariat responded that informal linkages with other international fora is important so as to ensure no duplication and to benefit from exchange of inputs. The report appears as doc. no. 98/SOM3/CTI/SCCP3/012.